2003 Legislation
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HOUSE BILL NO. 155 – Seed buyers, bond requirements

HOUSE BILL NO. 155

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H0155..................................................by AGRICULTURAL AFFAIRS
SEED BUYERS - Amends existing law relating to the seed indemnity fund to
provide for certificates of deposit in lieu of bond; to revise provisions
relating to letters of credit given in lieu of bond; to revise bonding
requirements and bonding provisions for certain seed buyers; to revise
provisions relating to the amount of bond; to provide for action by certain
injured producers; to revise provisions for actions based on breaches of
certain financial obligations; and to authorize the Department of Agriculture
to copy certain documents and records.
                                                                        
02/05    House intro - 1st rdg - to printing
02/06    Rpt prt - to Agric Aff
02/19    Rpt out - rec d/p - to 2nd rdg
02/20    2nd rdg - to 3rd rdg
02/27    Ret'd to Agric Aff

Bill Text


                                                                        
                                                                        
  ||||              LEGISLATURE OF THE STATE OF IDAHO             ||||
 Fifty-seventh Legislature                 First Regular Session - 2003
                                                                        
                                                                        
                              IN THE HOUSE OF REPRESENTATIVES
                                                                        
                                     HOUSE BILL NO. 155
                                                                        
                             BY AGRICULTURAL AFFAIRS COMMITTEE
                                                                        
  1                                        AN ACT
  2    RELATING TO THE SEED INDEMNITY FUND LAW; AMENDING SECTION 22-5104, IDAHO CODE,
  3        TO PROVIDE FOR CERTIFICATES OF DEPOSIT AND SINGLE BONDS, TO STRIKE  PROVI-
  4        SIONS  RELATING  TO CERTAIN SEED BUYERS OPERATING AS SEPARATE ENTITIES, TO
  5        PROVIDE FOR CERTIFICATES OF DEPOSIT IN LIEU OF BOND AND TO  REVISE  PROVI-
  6        SIONS  RELATING  TO  LETTERS OF CREDIT GIVEN IN LIEU OF BOND AND TO REVISE
  7        BONDING REQUIREMENTS AND  BONDING  PROVISIONS  FOR  CERTAIN  SEED  BUYERS;
  8        AMENDING SECTION 22-5105, IDAHO CODE, TO REVISE PROVISIONS RELATING TO THE
  9        AMOUNT  OF  BOND  AND  TO  MAKE  TECHNICAL  CORRECTIONS;  AMENDING SECTION
 10        22-5106, IDAHO CODE, TO PROVIDE FOR ACTION BY  CERTAIN  INJURED  PRODUCERS
 11        AND  TO  REVISE PROVISIONS FOR ACTIONS BASED ON BREACHES OF CERTAIN FINAN-
 12        CIAL OBLIGATIONS; AMENDING SECTION 22-5109, IDAHO CODE, TO  AUTHORIZE  THE
 13        DEPARTMENT  OF  AGRICULTURE  TO  COPY  CERTAIN  DOCUMENTS AND RECORDS; AND
 14        DECLARING AN EMERGENCY.
                                                                        
 15    Be It Enacted by the Legislature of the State of Idaho:
                                                                        
 16        SECTION 1.  That Section 22-5104, Idaho Code, be, and the same  is  hereby
 17    amended to read as follows:
                                                                        
 18        22-5104.  BONDS  --  IRREVOCABLE  LETTERS  OF  CREDIT  --  CERTIFICATES OF
 19    DEPOSIT -- SINGLE BOND. Every person applying for a license shall execute  and
 20    file  with  the  department  a  good  and sufficient bond issued by an insurer
 21    authorized to transact such insurance in this state.  The  bond  shall  be  in
 22    favor  of  the  seed  indemnity fund to secure the faithful performance of the
 23    applicant's obligations under this chapter,  and  of  such  additional  unpaid
 24    obligations  assumed under agreements with producers of seed crops transferred
 25    to or deposited with the applicant. Said  bond  shall  be  in  such  form  and
 26    amount,  shall  have such surety or sureties, and shall contain such terms and
 27    conditions as the department may prescribe to carry out the purposes  of  this
 28    chapter. Whenever the department determines that a previously approved bond is
 29    insufficient,  it  may require an additional bond or bonds conforming with the
 30    requirements of this chapter. Unless the additional bond is given  within  the
 31    time  fixed  by  a  written  demand  therefor, the license may be suspended or
 32    revoked.
 33        Seed buyers with common ownership  or  management,  operated  as  separate
 34    entities,  shall  have  individual bonds for each separate entity in an amount
 35    conforming to the provisions of this chapter.
 36        At the discretion of the director, any person required to submit a bond to
 37    the department may give to the department an irrevocable letter of credit pay-
 38    able to the seed indemnity fund in lieu of the bond required herein. The prin-
 39    cipal amount of the letter of credit shall be the same as that required for  a
 40    surety  bond  pursuant  to  this chapter. The letter of credit shall remain on
 41    file with the department until it is released, canceled or discharged  by  the
 42    director  or  until  the  director is notified ninety (90) days in advance, by
 43    registered or certified mail, return receipt requested,  that  the  letter  of
                                                                        
                                           2
                                                                        
  1    credit  is  renewed,  canceled  or amended. Failure to notify the director may
  2    result in the suspension or revocation of the seed buyer license.  The  provi-
  3    sions  of  this  chapter  that  apply to a bond apply to each letter of credit
  4    given in lieu of such bond. Under the provisions of this chapter, an irrevoca-
  5    ble letter of credit shall not be accepted unless it is issued by  a  national
  6    bank  in  Idaho  or  by  an  Idaho state-chartered bank insured by the federal
  7    deposit insurance corporation.
  8        At the discretion of the director, any person required to submit a bond to
  9    the department may give to the department an irrevocable letter of  credit  or
 10    certificate  of deposit payable to the seed indemnity fund in lieu of the bond
 11    required herein. A certificate of deposit shall be submitted with  an  audited
 12    or  reviewed  financial statement prepared in accordance with the rules of the
 13    department by an  independent  Idaho  certified  public  accountant  or  Idaho
 14    licensed  public  accountant.  The principal amount of the letter of credit or
 15    certificate of deposit shall be the same as that required for  a  surety  bond
 16    pursuant to this chapter. The letter of credit or certificate of deposit shall
 17    remain  on  file  with  the  department until it is released, canceled or dis-
 18    charged by the director or until the director is notified ninety (90) days  in
 19    advance,  by  registered or certified mail, return receipt requested, that the
 20    letter of credit or certificate of deposit is renewed,  canceled  or  amended.
 21    Failure  to  notify the director may result in the suspension or revocation of
 22    the seed buyer license. The provisions of this chapter that apply  to  a  bond
 23    apply to each letter of credit or certificate of deposit given in lieu of such
 24    bond. Under the provisions of this chapter, an irrevocable letter of credit or
 25    certificate of deposit shall not be accepted unless it is issued by a national
 26    bank  in  Idaho  or  by  an  Idaho state-chartered bank insured by the federal
 27    deposit insurance corporation.
 28        If a seed buyer is also licensed pursuant to either chapter 2 or 5,  title
 29    69,  Idaho  Code,  that  seed  buyer  may obtain a single bond, certificate of
 30    deposit or irrevocable letter of credit as surety for both chapter  51,  title
 31    22,  Idaho  Code, and chapter 2 or 5, title 69, Idaho Code. The bond, certifi-
 32    cate of deposit or irrevocable letter of credit shall be made out in favor  of
 33    the  commodity indemnity fund and the seed indemnity fund. In the event a seed
 34    buyer fails as defined in section 22-5102(5), Idaho Code, and a  single  bond,
 35    certificate  of deposit or irrevocable letter of credit is written in favor of
 36    the commodity indemnity fund and seed indemnity  fund,  the  proceeds  of  the
 37    bond, certificate of deposit or irrevocable letter of credit will be allocated
 38    based on the dollar amount of the verified claims approved pursuant to chapter
 39    51, title 22, Idaho Code, and chapter 2, title 69, Idaho Code.
                                                                        
 40        SECTION  2.  That  Section 22-5105, Idaho Code, be, and the same is hereby
 41    amended to read as follows:
                                                                        
 42        22-5105.  AMOUNT OF BOND -- NOTICE OF CANCELLATION. The amount of bond  to
 43    be  furnished  for each seed buyer will be fixed at a rate of six percent (6%)
 44    of whichever of the following amounts is greater:
 45        (1)  Tthe combined total seed buyer indebtedness paid or and owed to  pro-
 46    ducers  for seed crop stored for withdrawal or transferred during the previous
 47    license year; or
 48        (2)  The estimated current calendar year seed crop indebtedness  owed  and
 49    estimated  to be owed to producers, whichever is greater for seed crop for the
 50    current license year.
 51        In any case, the amount of the bond shall not  be  less  than  twenty-five
 52    thousand  dollars  ($25,000)  and shall not be more than five hundred thousand
 53    dollars ($500,000). This bond shall run concurrently  with  the  seed  buyer's
                                                                        
                                           3
                                                                        
  1    license.  A  ninety  (90) day written notice, by registered or certified mail,
  2    return receipt requested, shall be given to the director by the  bonding  com-
  3    pany before it may amend or cancel any bond.
                                                                        
  4        SECTION  3.  That  Section 22-5106, Idaho Code, be, and the same is hereby
  5    amended to read as follows:
                                                                        
  6        22-5106.  ACTION BY PERSONS PRODUCER INJURED. Any person producer  injured
  7    by  the  breach  of  any financial obligation for which a bond, or irrevocable
  8    letter of credit or certificate of deposit is written under this chapter, must
  9    petition the director to make demand upon the seed buyer, the  certificate  of
 10    deposit,  irrevocable  letter  of credit, or on the bond to enforce payment of
 11    claims.
                                                                        
 12        SECTION 4.  That Section 22-5109, Idaho Code, be, and the same  is  hereby
 13    amended to read as follows:
                                                                        
 14        22-5109.  MAINTENANCE  OF  RECORDS -- EXAMINATION OF RECORDS -- AUTHORIZA-
 15    TION TO COPY. The seed buyer shall maintain current and  complete  records  at
 16    all  times  with  respect  to  all  seed  crops handled, deposited, shipped or
 17    merchandised by it, including seed crops  owned  by  it.  Such  records  shall
 18    include,  but  are  not limited to, records showing the total quantity of each
 19    kind and class of seed crop received and loaded out and the  amount  remaining
 20    on deposit at the close of each business day.
 21        Records  required  by this section shall be legible and kept in a place of
 22    safety in this state for a period of five (5) years. If a person  operates  at
 23    more  than  one  (1) location, records of each location's transactions must be
 24    identifiable.
 25        The department is authorized to examine records to confirm the proper col-
 26    lection and remittance of seed indemnity fund assessments  and  payments.  The
 27    records  subject  to  examination  shall  include,  but  are  not  limited to,
 28    receipts, scale weight tickets, conditioning  records,  production  summaries,
 29    and  payments to producers. The department is authorized to make copies of any
 30    documents or records relevant to compliance with the provisions of this  chap-
 31    ter.
                                                                        
 32        SECTION  5.  An  emergency  existing  therefor,  which emergency is hereby
 33    declared to exist, this act shall be in full force and effect on and after its
 34    passage and approval.

Statement of Purpose / Fiscal Impact



                       STATEMENT OF PURPOSE
                             RS 12820
     Amends the Seed Indemnity Fund law to allow for one bond to
cover the Seed Indemnity Fund law and the Bonded Warehouse law or
Commodity Dealer law.  Allows for a certificate of deposit in
lieu of a bond.  Authorizes the department of agriculture to make
copies of certain books , records, papers, and accounts of seed
buyers.  Adds clarity to nomenclature.
     An emergency exists because seed buyer license renewals are
July 1 and warehouse license renewals are April 1.  Bond runs
concurrent with the license period.
                          FISCAL IMPACT
There will be no impact to the general fund.


Contact
Name: Russ Dapsauski, Department of Agriculture 
Phone: 332-8612




STATEMENT OF PURPOSE/FISCAL NOTE                         H 155